Chevron Buys Anadarko
(Bloomberg) -- Chevron Corp. agreed to buy Anadarko Petroleum Corp. in a $33 billion bet on shale oil and liquefied natural gas.
Chevron will acquire all outstanding shares in Anadarko for $65 each, paying with a mixture of cash and its own stock. That’s a premium of 39 percent to the closing price on Thursday. Anadarko’s shares soared to $62 in pre-market trading.
Chevron is making a double bet on what many industry observers consider the future of Big Oil over the next decade. The deal adds acreage and production in the prolific Permian shale basin of West Texas and south-east New Mexico. It also increases its exposure to LNG at a time when the fight against climate change is making natural gas the preferred fuel.
“The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deep-water Gulf of Mexico capabilities and will grow our LNG business,” Chevron’s Chairman and Chief Executive Officer Michael Wirth said in a statement.
Anadarko has long been rumored to be a takeover target of the world’s largest oil companies, offering a suite of assets including a massive LNG facility in Mozambique that is racing against an Exxon Mobil Corp. project to be first to market.
Shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share. That means Chevron will issue 200 million shares and pay $8 billion in cash. The company will also assume about $15 billion of net debt, giving Anadarko an enterprise value of $50 billion.
Chevron expects the deal to add to free cash flow and earnings per share one year after closing, at $60-a-barrel Brent. The company said will boost its share repurchase rate by $1 billion to $5 billion per year upon closing of the deal. It expects the transaction to achieve run-rate cost synergies of $1 billion before tax and capital spending cuts of $1 billion within a year of closing.
"Consolidation in deep water and the shales makes complete industrial sense,” Christyan Malek, head of EMEA oil and gas research at JPMorgan, said by email. “It gives the combined entity the ability to high-grade its assets and focus on where the best cash returns are."
The deal is expected to close in the second half of the year, subject to Anadarko shareholder approval, regulatory approvals and other customary closing conditions.
--With assistance from Javier Blas and Kelly Gilblom.To contact the reporter on this story: Kimberly Yuen in New York at kyuen3@bloomberg.net To contact the editor responsible for this story: James Herron at jherron9@bloomberg.net
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Gunvor CEO Sees Russian Refining Capacity Taking Hit from Drone Strikes
- These Factors Helped Brent Oil Price Break Above $85
- Sinopec Engineering Posts Higher Annual Petrochemicals Revenue
- Imperial Pipeline in Winnipeg Goes Offline for Three Months
- Gaz System to Acquire Gas Storage Poland
- Subsea7 Secures Contract to Service Woodside's Trion
- Adnoc Inks Supply Deal for Ruwais LNG Project with Germany's SEFE
- EIA Boosts USA Crude Oil Production Forecasts
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension